From 1 April 2026, a new FBT year is underway. If your business provides non-cash benefits to employees or directors, there are lodgement deadlines fast approaching that you may not have planned for.
Fringe Benefits Tax is one of those obligations that catches businesses off guard, not because the rules are new, but because many small business owners have never had to think about it. If your business runs a company vehicle, pays for staff entertainment, or covers certain personal expenses for employees, you may have an FBT obligation you haven’t accounted for.
What Is Fringe Benefits Tax?
Fringe Benefits Tax is a tax paid by the employer, not the employee, on non-cash benefits provided to staff because of their employment. That could be things like:
- Company cars
- Entertainment, including tickets to concerts or events, corporate meals
- Interest-free or low-interest loans
- Rent-free or subsidised housing
- Reimbursed expense payments
- Residual benefits
Unlike income tax, it runs on its own separate year from 1 April to 31 March, which is why it sits outside the usual end-of-financial-year rhythm most businesses are familiar with.
The FBT rate is 47%, deliberately set high to remove any tax advantage from paying people in benefits rather than salary.
What Triggers an FBT Obligation?
The most commonly understood trigger is company vehicles. Specifically, any vehicle made available for an employee or director’s private use, including the daily commute to and from work.
But in our experience, entertainment expenses are the area businesses most commonly miss. “It’s largely a lack of education,” says Shane Borg, Director at Stones Sharp. “Business owners don’t realise that staff lunches, client dinners, and end-of-year functions can all create an FBT obligation.”
Other common triggers include:
- Paying or reimbursing personal expenses such as gym memberships, school fees, or private phone bills
- Loans to employees at low or no interest, including debts the business isn’t actively chasing
- Benefits provided to family members of employees or directors
Not every perk triggers FBT. Items valued under $300 that are provided infrequently and irregularly generally fall under the minor benefits exemption, and portable electronic devices used primarily for work, such as laptops, are also typically exempt. If your business only provides benefits of this nature, you may have no obligation at all.
Why So Many Businesses Don’t Realise They Have an Obligation
FBT is a separate registration, a separate return, and a separate year. It doesn’t flow through your BAS or your income tax return, which means it’s easy to overlook entirely, particularly for businesses that are otherwise on top of their obligations.
The ATO has acknowledged that despite being in place for 40 years, FBT remains the most overlooked employer obligation. And we see this regularly. There’s also a persistent assumption that FBT only applies to large companies with formal salary packaging arrangements. In reality, a single company vehicle and a handful of staff expenses can be enough to create a lodgement obligation.
What the ATO Is Doing About It Right Now
The ATO is actively using data matching to identify businesses that should be lodging FBT returns but aren’t. Vehicle registrations, business structures, and lodgement history are all cross-referenced, and the gaps are visible.
Current areas of focus include private use of vehicles, benefits provided to closely held employees such as family members, and businesses claiming exemptions they can’t substantiate. A specific issue is businesses claiming 100% business use of a vehicle without a compliant logbook to support it.
It’s also worth understanding what the process looks like when a client is caught without adequate records. As Shane explains: “It’s drawn out and extensive. The client must provide everything that’s requested, and if they don’t have good records, they have to go back to the original source.” That means chasing down years of receipts, bank statements, and documentation from third parties, which is time-consuming and costly.
One further consideration: if no FBT return has ever been lodged, the ATO’s review window has no time limit. Lodging, even a nil return, starts the clock.
The Lodgement Deadlines That Matter Now
The 2026 FBT year closed on 31 March 2026. The deadlines that now apply are:
- 21 May 2026: self-lodgement deadline for businesses lodging their own FBT return
- 21 May 2026: the cut-off for a tax agent to add a new client to their lodgement program
- 25 June 2026: the extended deadline for returns lodged electronically by a registered tax agent
How We Manage FBT at Stones Sharp
Each April, we contact our FBT clients directly to gather the information we need to process their return. If you’re not already in that process with us, or with your own accountant, this is something to act on immediately.
What to Do If You’re Not Sure
Run through the triggers above. If a company vehicle, entertainment expenses, or personal expense reimbursements sound familiar, an FBT obligation likely exists. The first step is checking whether your business is even registered for FBT. If it isn’t and it should be, that needs to be addressed as a priority.
Speak with your accountant ASAP. Come prepared with records of any vehicle use, entertainment expenditure, and personal expenses the business has covered during the year from 1 April 2025 to 31 March 2026.
Getting It Right Going Forward
The records that support an FBT return, including logbooks, odometer readings as at 31 March each year, employee declarations, and entertainment expense records, need to be maintained throughout the year, not reconstructed at year end. Good habits put in place now will make the next FBT year significantly simpler.
If you’d like to understand whether your business has an FBT obligation, or you’d like help getting your return lodged before the deadline, get in touch with the team at Stones Sharp. We’ll work through it with you.
